We use cookies to customise content for your subscription and for analytics.If you continue to browse Lexology, we will assume that you are happy to receive all our cookies. For further information please read our Cookie Policy.

Second legal challenge to employment tribunal fees fails

We consider the High Court’s rejection of UNISON’s second legal challenge to the Government’s introduction of employment tribunal fees in the case of R on the application of UNISON (No 2) v The Lord Chancellor [2014] EWHC 4198 (Admin). The effect of this decision is that the fees regime will continue unchanged for the time being. However, this is not necessarily the end of the story. UNISON has indicated that it will appeal against the decision and, with a general election looming, it is quite possible that a new government will revisit the issue of fees.

Facts

Until 29 July 2013, employees could pursue claims in the employment tribunals free of charge. From that date a fees regime was introduced whereby applicants to the employment tribunal have to pay an initial fee when they make their claim and a further hearing fee if the matter proceeds to a hearing. The level of fee payable depends on the type of claim being brought. Claims are categorised as Type A or Type B, with a higher level of fee applying to Type B claims (which include unfair dismissal and discrimination claims). There is a fee remission scheme in place and applicants who qualify under this scheme may apply to have their fees reduced or to be exempted from paying fees.

The trade union UNISON has sought to challenge the tribunal fees system by bringing two separate judicial review applications in the High Court, in which it argued that the regime is unlawful.

First judicial review application

In its original judicial review application, UNISON ran a number of arguments to challenge the legality of the tribunal fees regime. While UNISON’s application was unsuccessful, not all of its arguments were rejected completely by the High Court. Two of its arguments (summarised in our account of the second judicial review application) were found to be premature and to lack the robust evidence required to justify overturning the fees regime. This first judicial review application had been brought prior to the publication of official tribunal statistics showing the effect of the introduction of the fees regime on the number of claims being brought. The Court took the view that it was too early to say whether the introduction of the fees regime would have the unlawful effects that UNISON was claiming. The Court instead said that: “It seems to us more satisfactory to wait and see and hold the Lord Chancellor to account should his optimism as to the fairness of this regime prove unfounded.”

UNISON appealed against this decision. However, this appeal was subsequently stayed and UNISON was given permission to bring a second judicial review application when employment tribunal statistics were published showing a substantial reduction in the number of claims being brought after the introduction of fees.

Employment tribunal statistics

The publication of the Tribunal Statistics Quarterly showed a very sharp reduction in the number of claims brought in the employment tribunal since the introduction of fees. The statistics indicated a 79% drop in the number of claims accepted by the employment tribunal between October and December 2013 as against the corresponding period in 2012, prior to employment tribunal fees. Similarly the statistics for January to March 2014 showed an 81% drop compared to the corresponding period in 2013 and subsequent statistics have shown a similar trend. While the introduction of tribunal fees may not be the only factor in the sharp decline in the number of claims (for example, the introduction of mandatory Acas early conciliation and the increase in the qualifying service required to bring an unfair dismissal claim may also be contributing factors), there is little doubt that it has had a significant effect in deterring employees from bringing claims.

Second judicial review application

Fortified by these striking statistics UNISON brought a second judicial review application in the High Court, focussing on the two arguments that the High Court had considered to be premature in the first application and relying on the newly published employment tribunal statistics. UNISON’s arguments were:

The EU principle of “effectiveness” (essentially access to justice) had been infringed by the introduction of the fees regime.

The introduction of the fees regime insofar as it applies to Type B claims (for which a higher fee is payable than Type A claims) is indirectly discriminatory. For example, a woman bringing a sex discrimination claim (which is a Type B claim) would be required to pay a higher fee than someone bringing a Type A claim and a higher proportion of women than men bring sex discrimination claims.

The High Court rejected these arguments. The relevant test to establish whether the principle of effectiveness had been breached was whether the introduction of tribunal fees made the right of access to the tribunal virtually impossible or excessively difficult. While the Court accepted that the statistics clearly showed that the introduction of fees had had a marked effect on the willingness of employees to bring claims, this did not mean that they were unable to do so.

The Court noted that while the statistics in relation to claim volumes had been relied on by UNISON, the Court had not been given any evidence that any individual had asserted that he or she had been unable to bring a claim because of cost. The Court considered it could only properly test the argument of breach of the principle of effectiveness if it could review the income and expenditure of one or more individuals and apply the principle of effectiveness to their concrete situation.

As far as the argument of indirect discrimination was concerned, the Court was not persuaded that women or any other protected group were discriminated against by the introduction of Type B fees. It was not appropriate to focus on a sub group of cases within Type B (such as people who brought discrimination claims) when seeking to identify whether there was indirect discrimination, as this would distort the results.

The Court did not therefore consider the introduction of tribunal fees to have an indirectly discriminatory effect but even if it did, it considered that the defence of justification may apply as the fees regime sought to achieve the following legitimate aims:

transferring a proportion of tribunal running costs to users who benefit from it and can afford it

improving the efficiency of the tribunal system by removing unmeritorious claims, and

encouraging alternative methods of dispute resolution.

UNISON’s second judicial review application was therefore dismissed.

Comment

While UNISON will doubtless be disappointed (and some employers will be relieved) by the High Court’s decision, this is not necessarily the end of the story. UNISON has been granted leave to appeal against the High Court’s decision and has indicated that it intends to do so and to apply for this appeal to be joined with its appeal against the first judicial review decision.

Given the High Court’s comments about it not having seen any evidence of any individual who was unable to bring a claim due to the introduction of tribunal fees, it is quite possible that one or more individuals who claim to fall within this category may seek to bring judicial review claims of their own (perhaps supported by a trade union). However, the High Court indicated in its decision that arguably an individual would need, prior to bringing such a legal claim, to seek the Lord Chancellor’s agreement to exercise his discretion to relieve the claimant of the obligation to pay fees due to exceptional circumstances and there are probably few individuals who have done so.

In any event, with a general election due to take place later this year, it is possible that the whole issue of tribunal fees may be revisited by a new government. This would be particularly likely in the case of a Labour government, as the Labour party has said that in government it would “reform employment tribunals so income is not a barrier to justice”. However, details of what this would involve have not been given.

The introduction of employment tribunal fees has had a significant effect and is undoubtedly a political hot potato about which people on both sides of the debate have strong opinions.

Compare jurisdictions: Employment & Labor: North America

“I enjoy the CLANZ newsstand and find it highly relevant to my job. I definitely have forwarded various articles to my colleagues on occasion where there is a point of general interest, particularly employment or IT law. I really appreciate the service, it's a quick way for me to keep up to date in a way I wouldn't otherwise have time to.”